Hoegh LNG says Port Kembla FSRU talks in “final stages”

Floating player Hoegh LNG is close to clinching a deal with Australian Industrial Energy to charter one of its FSRUs for the latter’s proposed Port Kembla import terminal in New South Wales.

“Negotiations for the time charter party (TCP) with Australian Industrial Energy (AIE) for their Port Kembla project are in the final stages,” Hoegh said on Thursday in its first-quarter report.

AIE, owned by Australian businessman Andrew Forrest’s Squadron Energy, has previously selected the Hoegh Galleon as the project’s FSRU, but the firm still needs to take a final investment decision.

The Port Kembla terminal, claimed to be Australia’s first LNG import facility, will have the capacity to deliver over 100 petajoules of natural gas each year. This represents about 75 percent of NSW total market needs, according to AIE.

“The project is making good progress and the Australian Energy Market Operator (AMEO) is
now factoring the project into its projections for future energy capacity,” Hoegh said.

Net loss

To remind, Leif Hoegh and funds managed by US-based Morgan Stanley Infrastructure Partners have recently completed the previously announced acquisition of Hoegh LNG.

Hoegh said in the quarterly report its shares would be delisted from the Oslo Stock Exchange on May 27.

Hoegh recorded a net loss after tax of $2.4 million for the first quarter of 2021, compared to a net loss of $1.02 in the same quarter last year and a profit of 0.8 million in the preceding quarter.

This decrease mainly reflects the lower EBITDA which dropped from $55.2 million in the prior quarter to $51.8 million in the first quarter, Hoegh said.

Total income reached $84 million in the January-March period, in line with $84.4 million in the preceding quarter but down from $86.7 million in the first quarter last year.

“This small decrease mainly reflects Hoegh Giant being idle in connection with the start-up of the new contract with H-Energy in India and Hoegh Galleon commencing the extension of the charter with Cheniere at a lower time charter rate,” the firm said.

“Healthy pipeline” of FSRU projects

The group’s fleet consists of ten modern FSRUs and two LNG carriers. Hoegh LNG Partners operates five of these vessels.

Following the execution of a 12-month interim LNG carrier charter for Hoegh Esperanza from June this year, the company has 100% contract coverage for 2021.

Hoegh says it has a “healthy pipeline” of FSRU projects at various stages of development.

The firm said the most important developments since the previous quarterly report relate to the two Australian projects and the project in the Philippines.

Besides the Port Kembla project, Hoegh also had a conditional deal with Australian utility AGL Energy for the proposed FSRU-based LNG import project at Crib Point in Victoria.

However, AGL recently decided to stop developing the project following a decision in March by the Victorian government to reject its plan to install the unit at Crib Point and the associated pipeline due to “environmental concerns.”

As a consequence, the conditional contract between Hoegh and AGL will terminate, Hoegh said.

In addition, First Gen recently awarded the conditional FSRU contract for their Batangas LNG project in the Philippines to a competitor of Hoegh, the firm said.

Prior to the award, First Gen had shortlisted to only Hoegh and BW Gas, a unit of the Singapore-based BW, to provide the unit.

BW Gas will provide its converted 162,000-cbm FSRU named BW Paris to serve the import facility at First Gen’s existing Batangas energy complex.

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